The overall tone in the markets looks mixed, with dollar steadying after rally
As fresh US report showed that the economy remains resilient, Wall Street stocks retreated from all-time highs overnight. The ISM Services PMI rose to 53.4 from 50.5 in December to beat the market expectation of 52.0, suggesting the Fed could pause longer before cutting rates. Of note, Powell said over the weekend that the central bank is unlikely to begin in March, as many investors had earlier hoped. The S&P 500 fell 0.3%, the Dow Jones Industrial Average dropped 0.7%, and the Nasdaq Composite edged down by 0.2%.
In Asia, equities were mixed-to-lower on Tuesday, while Chinese markets advanced after reports showed that Central Huijin Investment promised to expand its purchases of stock index funds to help markets. The Shanghai Composite index was up 3.23%, while Hong Kong’s Hang Seng rallied nearly 4%, buoyed by technology stocks including Alibaba, which gained 3.9%. Elsewhere in the region, Tokyo’s Nikkei 225 index fell 0.56%, the Kospi in South Korea lost 0.58%, and Australia’s S&P/ASX 200 shed 0.6%.
European markets opened higher Tuesday, with the pan-European Stoxx 600 up 0.5% in early deals. At the start of the week, regional equities fell as Powell said the Fed will likely move at a slower pace on rate cuts than the market expects. US stock index futures look directionless in early pre-market deals following a sell-off triggered by higher bond yields. Leading the gains, BP rose 5% after announcing plans to boost shareholder returns even after a sharp drop in full-year profits.
Meanwhile, the US dollar has steadied after three bullish sessions in a row. During the previous session, the USD index briefly peaked at 104.60 before retreating partially amid some profit-taking. Since then, the greenback has settled around 104.35, trading under some selling pressure on Tuesday as risk sentiment has improved somewhat after yesterday’s dip on Wall Steet. On the downside, the immediate support now arrives around the 104.00 figure, followed by the 103.80 zone. Should demand reemerge any time soon, the dollar may get back above the 104.50 region.